How would you compare the cost of utilities in the Yucatan real estate region to the cost of the same utilities in the United States? Electric, gas and water?
Electricity in nearly all of the Mexico real estate regions are controlled by the government owned CFE “Comision Federal de Electricidad” The amount you pay for electricity is based upon usage and is billed on a three level tier - Basic, Intermediate and High. The lowest level is generally subsidized to provide cheap electricity to the poor. However, as soon as you get into the higher levels, electric usage can be expensive. There is ample motivation to use energy efficiently.
Mexico generates electricity by utilizing thermoelectric, hydroelectric, coal-fired, geothermal, wind powered plants and a nuclear power plant. For more information on CFE see their website at:
http://www.cfe.gob.mx/Paginas/Home.aspx There are a few pages in English.
Natural Gas in Mexico is basically the same price as it is in Texas. In 1997, the Comisión Reguladora de EnergÃa of Mexico implemented a netback rule for linking the Mexican natural gas price to the Texas price. At that time, the Texas price reflected a reasonably competitive market.
Most residential user of natural gas purchase it by the tank. Some homes have tanks on the roof others use smaller tanks that are mobile. There are several gas companies that sell natural gas in Yucatan and they provide service directly to your home or you can refill your tanks at the operations facilities.
The Yucatan real estate region is truly blessed to have an abundant supply of sweet water. Water in Yucatan and the cost associated with it’s house hold use is very inexpensive.
Can I get a mortgage to finance my purchase of a house in the Yucatan?
Mortgages are available in Yucatan for Mexican and Foreign home buyers. Scotiabank, Banamex, Bancomer and several other international banks and mortgage banks will provide mortgage backed funds for a home purchase in Mexico.
HOWEVER, the loan process is expensive, time consuming, brain damaging and very rarely utilized in Yucatan. There are numerous difficult issues that will confront a home buyer wishing to use institutional financing to purchase real estate:
*Â Most lenders will not make loans for purchases of less than $100,000.00-usd.
*Â Down payments run 30% or higher.
*Â Interest rates are generally much higher than what a buyer would pay in the USA.
* The law requires that all transactions be recorded at actual sales price or an appraised value determined by the Office of the Catastro. The Catastro is concerned with establishing a valuation, the valor catastral, used as the basis of property taxation. Since this value of property in Yucatan is frequently much less than the actual sales price, a host of problems emerge for a financed purchase. It is very difficult to find reliable Comparables. There can be significant tax issues that severly impact the Buyer and Seller financially. Sellers who are not able to avoid capital gains taxes (ISR – Impuesto Sobre la Renta) face a 30% taxable rate on their gain. Buyers pay a 2% (in Yucatan) transfer tax based upon the purchase price or valor catastral of the property. To issue a mortgage, banks will require that the actual purchase price be recorded at the sale and an independent appraisal that supports the purchase price will be required.
*Â Most lenders will not make a loan for raw Mexico land, raw beach, properties that are in very poor condition or located in industrial or business type areas.
Where do most of the expats live in Merida?
By far, the majority of expats living in the city of Merida, live in the Central Historic District, known simply as “Centro”. Centro is a very large geographical area. In fact, Mérida has one of the largest centro historico districts in Mexico (surpassed only by Mexico City). (note to Ellen – maybe this is a good place for a link to google map of centro) Generally speaking, Centro is a couple square miles and it is populated by thousands of colonial homes, shops, restaurants, parks, squares, theaters, schools, businesses, government offices, markets, art galleries, sidewalk cafes, stunning architectural treasures and a few, unfortunately ugly buildings like the Telmex box. Most expats love the ability to walk to the theaters, parks, squares, markets and businesses located in Centro. There are cultural events nearly every night of the week in Centro – folkloric dance, concerts, poetry and musical recitals, ballet, the symphony orchestra, comedy, lectures, home and garden tours, The Merida English Language Library, cantina’s and much, much more!
Has the Yucatan housing market been affected by the downturn in the housing market in the USA?
The mortgage crisis of 2008 and the ensuing global financial crisis of 2009 had a an impact on the Yucatan real estate market. However, the S1N1 Flu scare of 2009 was more devastating to the Mexican economy and Yucatan real estate market than the global financial crisis. The double punch of the late 2008 mortgage meltdown and the April 2009 Swine flu pandemic scare lead to the worst real estate market we have witnessed in Yucatan since 9-11. Most Mexican schools and nonessential businesses were asked to voluntarily close for a week in April. The resulting negative press and global fear effectively killed the tourism, restaurant and real estate businesses for the remainder of 2009.
2010 was a good year and we saw a number of foreign and local buyers return to the market. The number of American buyers is still below average which we believe is due to the lingering weak economy and a “shell shocked” American consumer. Canadians, Europeans, Mexicans, South Africans and South Americans have returned to the market place. We believe 2011 will be a better year than 2010.
Mitch Keenan has been a Licensed Broker in the United States since the 1980s. He holds a GRI and a CRS from NAR (National Association of Realtors). With over ten years of living and working in the Yucatan real estate industry, Mitch brings American business ethics and Mexico business experience together to give buyers unparalleled service. 512-879-6546
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